The New York State and Local Retirement System (NYSLRS) is being mismanaged inasmuch as it does not recognize the member’s right to rollover loans taken at or near retirement.

Under current practice the retiring member may leave his/her contributions with the NYSLRS and receive an unreduced retirement allowance or take a maximum loan of 75% of the contributions account (a taxable event) and receive a reduced retirement allowance.

The retiring member is never told that he or she may effectuate a rollover of the amount of the loan to an IRA or other qualified plan. The right to rollover loans was first codified by the Unemployment Compensation Amendments Act of 1992 (UCA ’92). For 29 years thousands of NYSLRS retirees have been denied their statutory right to establish an IRA with 75% of their contributions account.

Note: The well informed retiree has taken advantage of the System’s mismanagement by rolling the amount of the loan into an IRA. UCA ’92, however, requires the withholding of 20% when the loan amount is not sent directly to the IRA. The System does not withhold 20% because the System does not know of the existence of UCA ’92.